New Float, Plus Profits
You could say it wasn’t the best timing to produce what could be our biggest IPO this year.
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Qantas Deal Moves Closer
Guess what; Qantas has a new major shareholder: admittedly it’s not a direct holding, yet,but as of the close of business Wednesday almost 200 million shares had been accepted into the $5.60 a share Airline Partners Australia offer.
Read MoreProfits: Hastie Does Better
Air conditioning and refrigeration company Hastie Group Ltd has reported a strong rise in underlying earnings and maintained its full year earnings guidance.
The company said that while net profit for the December half year was $9.99 million, down from $11.32 million in the previous corresponding period, on an underlying basis, earnings jumped almost 65 per cent to $10.15 million.
Underlying EBIT (earnings before interest and tax) rose to $18.22 million from $11.78 million.
Earnings per share jumped by almost 51 per cent to 8.9c from 5.9c, and an interim dividend will be paid of 5.5c a share.
Profits: MCC, HWI, SRA
Brisbane-based Macarthur Coal posted a sharp drop in first half net profit yesterday but says the full year is still on track.
The company has already signalled that earnings in 2007 would be lower because of various reasons but especially lower export prices as well as problems at the export and rail facilities and changes in mining policy.
Macarthur said that first half profit fell almost 50 per cent to $42.4 million, from $82.1 million in the first six months of 2006 financial year.
“Macarthur Coal’s profits were primarily affected by the 30 per cent reduction in the US dollar coal price in April 2006 from the record previous price,” the miner said.
But analysts said the result was better than the the market had been expecting and the coal miner has reaffirmed its guidance for a net profit of $63 million to $73 million which was given at the 2006 AGM.
Sales fell 22 per cent to $216.2 million from $277.6 million.
“Rain has impacted coal mining in the March 2007 quarter and port congestion has increased,” Macarthur said.
“Coal inventories are also low, leaving the company without stocks to cover unplanned production stoppages.
“Despite the weather-related delays in shipping, the company confirmed that it expects to meet its 4.5 million tonne annual shipping target subject to no further interruptions caused by rain or port congestion.”
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 48 per cent to $64.5 million and the company sliced its interim dividend by half to 11 cents a share from 23 cents a share last year. Earnings per share naturally fell from 47.1c to 22.6c in the latest period.
The shares eased 6c in the sell off yesterday to $4.87.
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Takeover target Housewares International has posted a $29 million loss first half and omitted dividend thanks to its underperforming Australian homewares business.
The $29.1 million net loss for the six months to December 31 compares with a net profit of $11.67 million in the first half of 2006.
The overall result was dragged down by $37.2 million in significant items, primarily a write-down of the assets of the Australian homewares business.
Housewares, which sources products offshore and on-sells to its Australian customers such as department stores, said its Australian homewares division suffered a $6.1 million loss for the six months to December 31.
This compared with a $900,000 loss in the previous corresponding half (and the reason why it has been looking to unload the business, without success).
Housewares said that the continuing losses primarily result from fierce market competitiveness, in particular significant direct import by major customers and associated discounting.
The company has been warning of this for at least 18 months as big retailers, such as Myer and Target, Kmart and Big W move to directly source homewares products from manufacturers in China.
Another Bid For QGC
Shareholders in Queensland Gas are doing very well: the company has just received another takeover offer, taking the number of full offers to three and ‘deals’ to one.
Sounds confusing. It should. There have been two bids from Santos, both now abandoned after the ACCC said no. AGL Energy has THE deal on the table at the moment which would give it a 27.5 per cent stake in exchange for long term gas supply contract.
And now US investment firm The TWC Group has launched an $812 million takeover bid for QGC.
The offer is well-timed, coming just two days before the QGC shareholders meeting tomorrow to discuss and approve or say no to the AGL deal, which is valued at around $292 million for the share deal.
After the TWC offer, Friday’s meeting might be off.
TWC is offering QGC shareholders $1.51 per share in cash or preference shares or a combination of each.
QGC shares rose in yesterday’s sell off to finish 18.5c higher at $1.54.5c on more than 11.5 million shares.
The cash offer will be tasty for shareholders after the sell down yesterday which has made investors twitchy.
Cash in the hand beats future promises in unsettled times, capital gains tax and all!
TWC said its offer was within a value range provided by an independent expert and represents an 11 per cent premium to QGC’s closing share price on Tuesday.
TWC, which has about $150 billion in assets under management, said its offer was superior to a proposal for QGC by AGL Energy.
“Our offer provides QGC shareholders with superior value and allows QGC shareholders the opportunity to participate for all of their shares, unlike the AGL proposal, which only included a limited 12.5 per cent buyback option,” TWC managing director Blair Thomas said in a statement.
QGC previously backed a proposed $292 million deal with AGL that would involve AGL taking a 27.5 per cent in QGC.
Last week, oil and gas producer Santos dropped its bid for QGC, which would have resulted in the creation of a “new” QGC, after opposition from the competition watchdog.
Santos kicked off the bidding at $1.26 a share which was too low; AGL slipped in with the placement/contract deal that sort of put a price of around $1.44 a share on QGC.
Santos then recast its offer into an old QGC/new QGC which it said effectively valued the company at around $1.80 a share (the ‘new’ company would be spun off, with Santos taking a large but not controlling stake).
The basic offer though was $1.30 a share and the promise of the spin off. The ACCC knocked that on the head so now TWC appears to have the upper hand.
TWC said it has an investment plan for QGC’s Undulla Nose coal seam assets and intends to ensure that QGC’s gas resources are commercialised soon.
“In addition to the development of QGC’s reserves, we will seek to address existing infrastructure bottlenecks that inhibit efficient development of Eastern Australian gas markets,” Mr Thomas said.
TWC said under its offer, QGC shareholders can receive their consideration in the form of 10 per cent preference shares that can be put into the company for one year.
If they elect to receive cash, they can also receive a maximum of 25 per cent of their consideration as preference shares instead.
TWC’s offer is subject to conditions including a minimum of 50.1 per cent acceptances.
Los Angeles-based TCW, which has about A$150 billion of assets under management, claims to be one of the biggest investors in coal seam methane in the world.
The company’s energy and infrastructure unit has more than $7.4 billion invested in more than 190 energy projects and owns stakes in five large coal seam gas operations, mostly in the U.S. and Canada. This deal, if successful, would be around 10 per cent of that total. TWC is part of the asset management arm of the European bank, Societe Generale.
Harvey Norman Boosts Profit
A slightly untidy interim profit from retailer, Harvey Norman.
Read MoreGoodman Improves
Only the New Zealand economy, its operations in that country and high commodity prices, stand in the way of food giant, Goodman Fielder, achieving its full year prospectus forecast of a pro-forma net profit of $223.9 million.
Read MorePaladin Bids For Summit
Well that’s one way of getting bigger, even in an easy money environment: use some of your highly-priced paper to make a hostile bid, even if it is a billion dollars.
Read MoreNewcrest Does Better
So is miner Newcrest on somebody’s radar or is the market really glad there were no surprises in this result?
Read MoreAdtrans Recovers As Fuel Prices Fall
Car and truck retailer Adtrans Group Ltd is looking for further gains in earnings as it rides out the downturn in the car sector.
Read MoreDowner Recovers Cred.
Downer EDI is continuing its slow recovery from last year’s big loss of credibility when it surprised investors with millions of dollars in losses and write-downs.
Read MoreFUN Cuts Dividend, Brings Back DRP
Re-instating a previously suspended dividend re-investment program at a time of strained profitability is always the sign of a board acting with a little bit of prudence and foresight.
Read MoreBlueScope Does Better, But Will Slow
Australia’s largest steelmaker, BlueScope Steel experienced a sharp recovery in first half earnings, but doesn’t expect that trend to continue in the second half of the current financial year.
Read MoreOil, Gold, Metals Catch A Surge
Just as our market had a big day Friday, rising conclusively over the 6000 point mark and finishing there, oil, copper and gold all hit 2007 highs on Friday night, our time, prompting suggestions of a gathering re-run of last year’s commodities boom.
Read MoreUS Markets Worry About Dud Loans
The gathering crisis in the subprime mortgage market in the United States is starting to send ripples through the broader economy.
Read MoreColes Special Sale Looms
Incompetence can harm a company in many ways: low share price, no profits, losses, takeover, management and board changes.
Read MoreProfits: GWA, SBC, EHL, SUL
Southern Cross Broadcasting, the metro radio and regional TV operator and TV production house, is confident an expected second half improvement in TV revenues will boost earnings after the flat first six months of the 2007 financial year.
Read MoreMiners Boom: OXR Up, ILU Recovers
2006 was a ‘golden and red letter year’ for medium level miner, Oxiana.
Read MoreMiners Boom: ZFX’s Cash Cascade
Despite reporting a record first half profit of $751 million, zinc miner, Zinifex copped a small trashing at the hands of investors yesterday.
Read MoreMarket Accepts IAG’s Lower Profit Story
Earlier this week an insurance analyst at a leading investment bank wondered where the downturn would come in the general insurance industry after solid performances by Promina and the GIO arm of Suncorp-Metway.
Read MoreSeven Makes Its Numbers
The Seven Network reported and delivered on guidance of a 40 to 45 per cent rise in pre-tax earnings yesterday and the shares ended up all square on the day at $11.63.
Read MoreSkilled Lower, Pacific Brands Higher
Skilled Group, the labour services and hire company, remains confident of posting higher earnings this financial year despite a drop in first half profit.
Read MoreMedia Profits, Deals
Media companies will dominate the news over the next couple of days with the likes of Seven Network (today) and PBL (tomorrow) reporting.
Read MoreTabcorp’s Shocker
The hatches have been battened; the gate bolted after the horse has gone and the strategy is changing at Tabcorp, but changing one would feel, all too late.
Read MoreMarket Likes WPL, Dislikes TOL
Some big results yesterday, led by oil and gas giant, Woodside Petroleum which reported a 29 per cent rise in earnings to a record, driven by higher output and prices.
Read MoreFGL Stumbles
Once again Fosters Group has under-delivered, upsetting investors and raising questions about the capabilities of the management team running Australia’s biggest liquor group.
Read MoreOneSteel Earns More
Like Promina and Suncorp-Metway OneSteel’s latest results are interesting in a historical sense but it’s the immediate future that holds the key to the company’s progress and profitability because of the dramatic changes that about to happen.
Read MoreVirgin Blue Profit Soars
A couple of weeks ago we pointed out that with Qantas heading down the runway towards takeover, Virgin Blue would attract more interest from investors wanting some exposure to airline stocks and a proxy on oil prices.
Read MoreSuncorp Lifts Profit, Looks Forward To Promina
Suncorp-Metway’s outlook isn’t about banking and insurance, it’s really about the Promina merger, should it be approved.
Read MoreMarket Doubts On ABC, Funtastic
Boom child care operator, ABC Learning Centres hit a small pothole yesterday in its endless quest to grow.
Read MoreCoates Surprises Market
Once again the market’s unhappiness with a company delivering news outside expectations has been shown with the poor reception given to the interim results from equipment hire giant, Coates Hire.
Read MoreDomino’s Also Surprises
Another stock to surprise on the downside was fast food darling, Domino’s Pizza Enterprises, promoters of the pan pizza based eating experience in Australia and in several major markets overseas.
The company yesterday revealed a first half that showed the pan pizza eating experience isn’t luring as many Australians to Dominos as before, but is still proving seductive to pizza eaters in parts of Europe.
As a result the shares shed 12 per cent in value, or around 40c to $3.25, after it reported a 46.2 per cent fall in first half profit.
That’s a big ouch and the confident story about overseas expansion wasn’t enough offset the fact that like Coates, DOM needs to do well in its home base to earn solid profits.
The company did warn in October after the first quarter, that earnings would down by at least “$1.2 million” because of the problems in Australia but they have continued, given the downturn for the full six months.
Those problems involved promotion and the high crust pizza product which seems to have done poorly.
For a company like Domino’s growth can come from converting sales gains in foreign markets into earnings a little down the track but the simple fact is that to maintain its rating among investors, it needs to sell more pizzas in Australia.
And it didn’t do that well enough in the first half of 2007, thanks in part to the high proportion of company-owned stores in Australia as against franchised outlets which generate fees and other income streams..
The company said net profit was $3.5 million for the half year ended December 31, down from $6.5 million in the corresponding period.
Not even an expected second recovery in after tax earnings (a forecast of a 40 per cent rise on the first half) could offset the market’s suspicion.
CEO Don Meij said the result reflected the impact of its expansion into Europe and poor performance in Australia in the first quarter.
He said while Australian same store sales growth had been weak, European same store sales growth was 12.5 per cent, the New Zealand was also solid (compared to Australia).
European operations are “tracking better than planned” and are expected to make its first profit contribution in 2007/08.
But the company said the EBITDA (earnings before interest, tax, depreciation and amortisation) in Australia was off almost 17 per cent because of weaker promotions and start-up costs associated with the new in-house equipment maintenance and supply department.
Mr Meij said the company would begin reducing the proportion of corporate stores over the next 12 months from 30 per cent to around 15-20 per cent.
“This move will refocus our corporate stores into cost-effective geographic locations and reduce administration overheads, while still maintaining the benefits of the hybrid corporate-franchise store model,” he said.
Sounds like franchise speak for ‘we’ll be cutting the influence of earnings from our own stores and get income streams from selling the surplus locations to outsiders’.
That’s a switch in approach from the previous approach of maintaining company owned outlets above what is considered normal in some areas of franchising.
The company’s revenue rose 36.4 per cent to $118.1 million in the first half while network sales increased by 42 per cent to $251 million.
Domino’s is the master franchiser for the Dominos Pizza brand in Australia, New Zealand, France, Belgium and the Netherlands and it and its franchisees operate 645 stores: 457 stores of those are in Australia and New Zealand, so when Australia is offsong, the company is offsong as well.
Domino’s declared a first half dividend of 4.1 cents.
Wotif Booms
Like jobs group, Seek, Wotif.com is showing just how profitable the internet business model can be for a company flogging what is essentially a service:in this case accommodation.
Read MoreUS Economy Slowing, Bonds Fall
US bond rates fell to 4.69 per cent for the 10 year security last week, the lowest for several months and perhaps a sign the hard heads in the market see the risks of an economic slow down are greater than investors in stocks and commodities.
Read MoreMarkets: A Correction Before More Gains?
The head of Strategy at the AMP, Dr Shane Oliver has warned that the local stockmarket “is in danger of a short term correction” after giving the 6000 point mark a nudge last week.
Read MoreMetals Up, Down
With oil prices back over $US59 a barrel, our market will get a touch of hope today but there was nothing much in the way of assistance from other commodities.
Read MoreRepco Stagnates
Repco Corp’s return to private ownership is on track, despite the troubled auto products retailing reporting a 67 per cent fall in first half profit and warning of a ‘challenging’ second half.
Read MoreHow The Banks Price Their Loans
Competition is often not understood or even practised in Australian business these days but in one industry its rife: lending money, especially home loans.
Read MoreTLS Advances On Promises
Five bucks here we come? Any advance on five bucks?
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